The Leuthold fund family is small, and most of its funds that have been around for a while have decent records. So when the firm recently unveiled Leuthold Global Clean Technology (symbol LGCTX), we wondered what Steven Leuthold, the fund’s co-manager and the firm’s chief investment officer, sees in this sector to make it worthy of its own fund.

We got the answer from David Kurzman, the fund’s senior analyst. First, he says, is the sea change in government attitudes toward alternative energy. The U.S., China and many other nations are throwing billions at clean tech, especially for energy-efficiency and renewable-energy projects. “The Obama administration alone said it wants to put $150 billion to work over the next ten years,” Kurzman says.

Uncle Sam is already giving and loaning money to a bedazzling array of “green” projects. For starters, it is paying 30% of the cost of renewable-energy projects -- such as solar panels and wind turbines -- through 2010.

And the Department of Energy recently announced that it’s lending $528 million to Fisker Automotive, an electric-car company. The money will help Fisker finish development of its Karma electric sports car, which will have a sticker price of about $88,000, and work on creating a cheaper model. Add the $465 million loaned to Tesla Motors in June for its battery-powered car, and that’s a cool billion of taxpayer money at risk on electric-car start-ups.

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The second attraction, says Kurzman, is that businesses and consumers have changed their spending patterns to become more eco-friendly. Not only does improving energy efficiency lower costs, “corporations find that being green helps their image,” he says. Kurzman himself isn’t crunchy at all when it comes to identifying investment opportunities -- he makes it clear that the fund is strictly in the game to make money for its shareholders.

Finally, says Kurzman, the long-awaited technology to deliver on the promise of green energy is here. Wind energy and geothermal energy, for example, can be cost-effective without government incentives, he says.

But Kurzman cautions that the green-tech market will be volatile, and, ironically, some of that volatility is baked in because of government incentives. For instance, the solar industry’s current shakeout will be protracted because incentives are extending the lives of solar companies that normally would go out of business, he says. Plus, it will take a few more years before most solar projects can make economic sense without inducements.

So the fund is steering away from most solar companies for now. One it favors, though, is SMA Solar Technology, a German company that is the world’s largest maker of “inverters.” These devices change the direct current generated by photovoltaic cells into an alternating current, so that it can be fed into the electrical grid. Although the price of PV cells and the shares of PV-cell makers are in the dumps because of overcapacity, SMA is trading at its 52-week high (the stock trades in Germany).

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Another of the fund’s top ten holdings is Hong Kong–traded BYD, a Chinese company that, among other things, makes electric cars. Kurzman says BYD has been selling its cars overseas and expects to export to the U.S. next year.

While the long-awaited Chevy Volt electric car is expected to cost more than $30,000 when it hits showrooms in 2010, Kurzman says a BYD model will go for less than $10,000. We’ll see.

Eight of Clean Technology’s ten biggest holdings are based overseas, and, in fact, its prospectus says that the fund will generally hold at least 40% of its assets in foreign stocks. The foreign flavor isn’t surprising. European firms, in particular, have a big head start over their U.S. counterparts in both renewable-energy and energy-efficiency technologies.

Kurzman and crew understand the big picture well, and we agree that the push to energy efficiency and renewable energy is a “multidecade event,” as he puts it. But if you want to dedicate a portion of your portfolio strictly to a green fund, is Leuthold Clean Technology your best choice?

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The absence of a track record is an issue. So are high expenses: 1.85% annually. So until the Leuthold fund proves itself, we’ll stick with our first choice among green funds: Winslow Green Solutions (WGSLX). The fund had a rough debut year, losing 54% in 2008. This year, through September 24, it has gained 24.8%. For more on why we like the fund, go to The Brightest Green Fund.